2004
News Releases

City’s New Deal proposes a 2 per
cent solution

WINNIPEG - April 6, 2004 - Two per
cent more. That’s all that separates Winnipeg from being a city
with crumbling infrastructure, to one that has the financial resources
to not only repair existing assets but also invest in becoming a creative
and vibrant city.

“This version of the New Deal is entirely based on citizen
feedback,” said Mayor Glen Murray. “Our consultation
process in the fall of 2003 was intensive and inclusive. Loud and
clear the message was, broaden the tax base, don’t broaden
the tax burden. Share more of the wealth that we’re already
giving to governments.”

Indeed polls taken following the New Deal consultation period supported
the need to address Winnipeg’s infrastructure problems through
intergovernmental tax shifting.

Based on that feedback, here’s what the City’s
revised New Deal proposes:

Transferring 2/3 of 1% of the GST that’s collected in
Winnipeg to the city to fund infrastructure investments. A portion
of GST tax revenue is considered better growth revenue for the
City over the long term.
Estimated new revenue - $62 million
December 2003 poll – 85% of Winnipeggers support “a
portion of federal sales tax being used to support city services.

Converting all existing provincial grants entirely to formula-based
income tax sharing. This would build on the Provincial Municipal
Tax Sharing Agreement, PMTS. All other grants would be eliminated.
Estimated new revenue – $0 million, but will increase over
time with economic growth
December 2003 poll – 82% of Winnipeggers support “a
portion of current provincial income tax being used to support
city services.

Increasing revenue through fuel tax.
Option A - Transferring 3 cents of existing provincial fuel revenue
collected in Winnipeg and increasing fuel prices 3 cents per litre
province wide and transferring the new tax collected in Winnipeg
to the city
Option B – Transferring 6 cents of existing provincial fuel
tax collected in Winnipeg.
Estimated new revenue - $66 million (either option)
December 2003 poll – 83% of Winnipeggers support “a
portion of current gasoline tax to help pay for maintaining and
repairing roads, and 63% support an increase in gasoline tax of
3 cents a litre if the revenue was dedicated to roads.

Providing citizens with a 4% property tax reduction in the first
year followed by an additional five years of tax freezes.
Estimated tax savings $15 million initially; tax savings increase
over time due to tax freeze.
December 2003 poll – 59% of Winnipeggers support “reducing
property taxes and shifting to other forms of taxation and fees.”

“We’re calling this the 2% solution,” added the
Mayor. The city currently collects 7% of all taxes generated in
Winnipeg. With our New Deal proposal, we’re asking the other
levels of government to invest in our city. We are asking for 2%
more of the total tax pie. This proposal reflects what Winnipeg
citizens have asked for”

In mid March, the New Deal proposal was forwarded to the Provincial
government for their consideration and review. The Federal, provincial
and city governments will now collectively forge the New Deal.

“This New Deal provides a pretty simple solution to a pretty
big problem,” said Councillor Bill Clement. “Citizens
have helped us craft this New Deal, now all levels of government
need to find the resolve to follow through to assist our city to
grow and prosper.”

This simpler New Deal package has dropped several of the consumer-based
tax shifting ideas. These have not been included, in some cases
because of public feedback, and also to assure that several of the
basic principles of any New Deal proposal were maintained: equity,
efficiency, ease of administration, environment and the economy.

This latest New Deal has undergone analysis by The Conference Board
of Canada, one of the foremost independent, not-for-profit applied
research organizations in Canada.

The Conference Board concludes that, the overall impact on the
City’s finances due to the proposed new fiscal arrangement
results in the City being able to meet its infrastructure needs
and also be in a financially sustainable position over the long
run.

The Conference Board also concludes the New Deal would have significant
positive economic impact on the Winnipeg economy due to the increased
infrastructure spending. Employment is forecast to rise by 1,000
jobs in 2005 and increase steadily to 2,300 new jobs by 2020. Real
GDP (Gross Domestic Product) is expected to be approximately 1%
above current projections.